The repeal of the retrospective tax shows Modi government means business on reforms

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The repeal of the retrospective tax was long overdue, and strongly signifies that the reformist trend in Modi 2.0 is not only continuing, but also strengthening. The institution of the tax in 2012 — it meant that the state could impose a tax on an activity ex-post, that is, the government could change the goalpost according to its fancy — was a stunner. Rumour has it that very few people in the Ministry of Finance, or outside, knew about this policy. Did PM Manmohan Singh know? Likely, but not entirely certain. Most experts believed that this policy was uniquely Indian, one befitting a country which had the word “socialism” inserted into the preamble to the Constitution some quarter century after the Constitution was written.

We were foolish to think that a retrospective tax could not happen in modern India. A year after the retro tax, it came to light that ITC had been fighting a retrospective excise tax case for 17 years, and…

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